IRS Refund Scams: Following concerns about tax scams and misleading social media advice that led many taxpayers to file inflated refund claims last season, the IRS has issued a consumer alert.
Scams involving Fuel Tax Credits, Sick and Family Leave Credits, and household employment taxes were highlighted by the IRS.
There were thousands of taxpayers who filed dubious claims, resulting in delayed refunds and the need for substantial documentation to prove eligibility.
According to IRS Commissioner Danny Werfel: “Scam artists have perpetuated a number of false and misleading claims to trick well-meaning taxpayers into believing they’re entitled to big, windfall tax refunds.”
According to him, these fraudulent claims are typically caught during the IRS’s fraud review process, and taxpayers who file such claims should expect an extensive review and possible long wait times for legitimate refunds.
In these bad refund claims, there are three recurring themes involving legitimate tax provisions that are often misapplied.
Tax credits for Sick Leave and Family Leave, which are no longer available for tax returns filed in 2023, and household employment taxes, where taxpayers falsely claim to have paid wages, are among them.
Taxpayers are urged to consult a tax professional to avoid falling victim to these scams. Taxpayers who have already filed incorrect claims are advised to amend them.
Rather than relying on questionable sources, Werfel recommended relying on a trusted tax professional rather than social media.
IRS freezes refunds due to tax scams
The IRS has frozen refunds for affected taxpayers due to the dubious nature of many of these claims.
IRS letters generally request additional information from taxpayers to verify their claims.
They may face penalties up to $5,000 per return for frivolous claims, audits, and possible criminal prosecution if they filed returns including these credits and did not qualify.
Taxpayers are advised to use the online tool “Should I file an amended return?” to determine if they should amend their returns, and if so, to consult a tax professional.
It is important to submit an accurate return without invalid claims as soon as possible to avoid penalties and further IRS action.
On returns with these bad claims, the entire refund amount is frozen, so taxpayers will not receive any refund until the issues are resolved.
Also Read: IRS Payment Deadline: What Time to Claim Your Pending Payments Tomorrow and How to Do It?
